The Centre for International Governance Innovation THE CARIBBEAN PAPERS A Project on Caribbean Economic Governance
The Caribbean Maritime Transportation Sector: Achieving Sustainability through Efficiency
Fritz H. Pinnock and Ibrahim A. Ajagunna
Caribbean Paper No. 13 March 2012
Addressing International Governance Challenges THE CARIBBEAN PAPERS
Acknowledgements About the Caribbean Economic The authors would like to thank and acknowledge Governance Project Indianna Minto-Coy for her attention to detail and diligence in editing the first draft of the manuscript. This project convened researchers and We are also grateful to the following persons at CIGI, leaders within the private and public sectors whose suggestions and reviews molded this paper: Daniel to examine and provide substantive answers Schwanen, Shannon Feldman, Zachary Osbourne and and policy prescriptions to current economic others that we are unable to mention here. governance challenges facing the Caribbean region. The papers were initially presented at We would like to thank the following industry executives CIGI workshops, where the authors benefited from the various ports in the Caribbean for their from extensive comments and discussion on contribution and efforts in providing needed data for the their work. This series presents and discusses paper: Everton Walters, CEO, Barbados Port Inc. (retired); policy issues pertaining to trade, investment, Glen Roache, Quality Manager, Barbados Port Inc.; Vincent human capital, the fiscal outlook, public sector Victor O’Neal, Managing Director, BVI Ports Authority; management practices and other issues relevant Harry Maragh, CEO, Lannaman and Morris Shipping to the Caribbean region’s economic future. Company; Grantley Stephenson, CEO, Kingston Wharves Limited; Sylvanus Davis, Assistant General Manager, Port of St. Lucia; Agatha Dublin, General Manger, Antigua and Barbuda Ports Authority; and Rosina Romeo, St. Marteen Ports Authority. Finally, we would like to thank our families for their understanding.
Acronyms and Abbreviations
CARICOM Caribbean Community
CIGI’s Caribbean Economic Governance Project is directed by Daniel CMI Caribbean Maritime Institute Schwanen. CSA Caribbean Shipping Association
The opinions expressed in this report are those of the author and do not G7 Group of Seven necessarily reflect the views of The Centre for International Governance IMO International Maritime Organization Innovation, its Board of Directors or Board of Governors, or the Government of Ontario. JIT just-in-time KCT Kingston Container Terminal KWL Kingston Wharves Limited LSCI Liner Shipping Connectivity Index CIGI gratefully acknowledges the Government of Ontario’s contribution to this project. MARPOL 73/78 International Convention on the Prevention of Pollution from Ships PAJ Port Authority of Jamaica SIDS small island developing states SLASPA St. Lucia Air and Sea Ports Authority Copyright © 2012 The Centre for International Governance Innovation. This work was carried out with the support of The Centre for International SOLAS 74/78 International Convention on the Safety Governance Innovation (CIGI), Waterloo, Ontario, Canada (www.cigion of Life at Sea line.org). This work is licensed under a Creative Commons Attribution- Non-commercial — No Derivatives License. To view this license, visit TEU twenty-foot equivalent unit (www.creativecommons.org/licenses/by-nc-nd/3.0/). For re-use or distribution, please include this copyright notice. UNCTAD United Nations Conference on Trade and Development ISSN 1915-6421 (Online)
2 | The Caribbean Maritime Transportation Sector: Achieving Sustainability through Efficiency The Centre for International Governance Innovation
Summary Introduction
The port structure of the Caribbean has been heavily The tourism industry has been embraced as a development influenced by global change over the last 200 years. The tool by many countries in the Caribbean as a result of the historical context — colonialism, piracy and slavery — impending demise of the traditional banana and sugar meant that ports were originally designed to serve colonial industries. The fastest-growing segment of the industry interests. The advent of containerization and globalization is cruise tourism, for which the Caribbean accounts have dramatically changed cargo shipping, while at the for 50 percent of the global market share by vessel same time, cruise tourism has increased significantly — calls and passenger count, but represents less than five the Caribbean accounts for 50 percent of the global market percent of the total global tourism industry revenue. — which means that cargo and cruise ships now compete Cruise ships have now become destination and floating for limited berth space. theme parks, thereby reducing the Caribbean region to a low-value, high-volume destination. This is due The Caribbean approach to the development and reform to the fragmented approach to the development of the of the maritime industry has been fragmented, as the maritime transportation industry in the Caribbean, which region is made up of microstates. As the global shipping is not sustainable in its current form. This unsustainable industry evolved, port infrastructure in the region has not approach to maritime development is the major issue kept pace, and needs to undergo a major overhaul in order that this paper discusses. In many territories, cruise ships to become sustainable. This paper provides an overview compete with cargo vessels for limited berthing space. of the maritime transport industry in the Caribbean, the Throughout the region, there is an understanding that history of both cargo and cruise shipping, and makes nine cruise ships get priority berthing over cargo vessels, policy recommendations that could help the region achieve which have to wait until after cruise ships sail to berth. sustainability and efficiency: take an integrated approach This means cargo vessels have to carry out their load when making large strategic decisions; take a regional and discharge operations after normal working hours, approach to port security; align labour market regulation resulting in massive overtime costs and often-lengthy to global standards; harmonize maritime transport delays. In all cases, these extra charges are passed on to industry legislation; consider the public benefit when local consumers, contributing to the high cost of maritime investing public funds in maritime infrastructure projects; transportation in the Caribbean. Barbados, for example, undertake collective economic, social and environmental has been seriously affected by this dilemma. impact studies; implement the landlord model; recognize that transshipment is not always the correct answer for The modern cruise industry has its roots in the early every port; and acknowledge that regional organizations cargo and passenger industries serving colonial interests should provide services to member governments. in the Caribbean. The birth of the modern cruise industry
Author Biographies
Fritz Pinnock is the executive director at the Caribbean Ibrahim Ajagunna holds a higher national diploma in Maritime Institute. His experience in the shipping and hospitality management from the Federal Polytechnic Idah, transportation industry spans over two decades. Fritz holds Nigeria, a master of science degree from Sheffield Hallam a Ph.D. in sustainable development from the University of the University, United Kingdom, a post graduate diploma in West Indies. He also holds a master of science degree from education from the University of Technology and a Ph.D. in University of Plymouth, United Kingdom. His consultancy sustainable development from the University of the West services in strategic management have been extended to many Indies. Ibrahim has presented papers at various conferences Caribbean islands, including Jamaica, Barbados, Antigua and seminars, and has also published materials in reputable and Guyana. He has written and presented papers at various international journals and has written book chapters in the areas conferences both within the shipping and transportation of tourism and hospitality. He has management experience industry, and educational institutions. Fritz is an expert in locally and internationally in positions in the tourism and developing and integrating operational and strategic plans, hospitality industries, and at educational institutions. Ibrahim reengineering, cost-cutting control and managerial systems is the immediate past vice president of the Council of Heads of development. Caribbean Hospitality Schools, Jamaica.
Fritz H. Pinnock and Ibrahim A. Ajagunna | 3 THE CARIBBEAN PAPERS
in the 1960s, however, accounts for the shift from mere General Shifts in the Maritime maritime transportation to the cruise tourism industry. The approach to the development and reform of the Industry maritime transportation industry has been fragmented, and the region has not capitalized on the opportunities The maritime transportation industry has a legacy of to use maritime transportation as a development tool. piracy, slavery and colonialism, catering to small-market The maritime transportation infrastructure throughout needs. The upward movement of world oil prices, the region was designed to facilitate colonial trade. the impact of globalization and containerization have Advancements in technology and skills have today placed all changed the face of the global shipping industry, the Caribbean in catch-up mode, as most reforms have and the Caribbean has been slow to respond. With the been cosmetic, and do not address the real need to container revolution in its ninth-generation phase with overhaul the entire infrastructure and take a holistic 15,000 twenty-foot equivalent unit (TEU) vessels on order, approach to positioning the Caribbean within the global Caribbean states are constantly dredging their channels logistics and supply chain. and upgrading their infrastructure in an attempt to remain relevant in a changing global environment. The pressure This paper takes a holistic look at the maritime transport has not been only on the physical infrastructure, but on sector in the Caribbean. It provides insight into both finding and retaining qualified personnel. Unfortunately, cargo and cruise shipping, which are often viewed the Caribbean has not kept pace with advancements in independently, yet compete for limited infrastructure and information technology, while at the same time, there has logistics support. The paper further categorizes Caribbean been a wide disparity between countries and ports in the ports into global hub ports, sub-regional hub ports and region, certainly in terms of productivity. service ports. The matters of efficiency and sustainability are examined against the unique historical background of New logistics concepts such as globalization, just-in-time Caribbean ports. The terms “sector” and “industry” are (JIT) and outsourcing have created the need to establish used interchangeably in this paper. complex international distribution chains. The ultimate goal is to allow shippers to place the right product on the Methodology manufacturing or retail floor anywhere in the world — at the right time and the right price. As a result, global The maritime transportation industry has received little logistic service providers have emerged in the past three attention in the Caribbean, due, in part, to the highly decades, the main objective of satisfying customer-driven specialized nature of the sector and limited trained demand. To achieve this objective, they frequently rely on human resource capacity in the region, as well as the partnerships with industrial, distribution and transport limited data and literature relating to Caribbean maritime entities. The global shipping industry, for example, is transportation. Information was obtained through driven by forces of scale and technology. The Caribbean primary sources (semi-structured interviews, observation comprises a group of disconnected states sharing ocean and the professional experience of the researchers) and space and is, therefore, challenged to find relevance secondary sources (government periodicals and industry within this paradigm. Sustained globalization and global journals). Research was conducted over a period of seven logistics would not be possible without a dense and months, and the countries reviewed include: Antigua efficient transport network. The question is: How does the and Barbuda, the Bahamas, Barbados, the British Virgin Caribbean fit into this picture? Given the poor performance Islands, the Cayman Islands, Dominica, the Dominican of many ports in the Caribbean, it is not surprising that Republic, Granada, Guyana, Haiti, Jamaica, St. Kitts, St. handling charges are two or three times higher than in Lucia, St. Maarten, St. Vincent, Suriname, Trinidad and similar ports in other regions of the world, and the overall Tobago, and Turks and Caicos. In the paper, emphasis cost of transport and insurance in the Caribbean basin is is placed on ports, analysis of port efficiency, the port some 30 percent higher than the world average (Pinnock connectivity index, labour challenges and the importance and Ajagunna, 2009). of regional cooperation, and concludes with a set of policy recommendations for Caribbean maritime transportation Before air travel, passenger ships were the primary including ports. means for transoceanic transport, and transportation was provided in style, especially for those who could afford to travel first class. Transoceanic travel hit its peak in 1957 and began to decline in 1958, when Pan American
4 | The Caribbean Maritime Transportation Sector: Achieving Sustainability through Efficiency The Centre for International Governance Innovation
Airways introduced nonstop air travel between New York as global transshipment hub ports, and sub-regional and Europe. Transatlantic boarding continued to steadily hub ports. The rest operate as service ports catering to decline through the early 1960s. This simultaneously led to domestic economic needs. the demise of companies such as Canadian Pacific (cruise operations), United States Lines, Hamburg-America Line Caribbean ports have been segregated into three categories and Swedish America Line. Many of the idle ships were (see Table 1): global hub ports, sub-regional hub ports and subsequently taken over by new companies that focused service ports. Global hub ports are relay ports serviced by on the passenger vessel for leisure travel. The leisure global container lines connecting three or more continents. industry, therefore, grew slowly in its early years, but by For example, the port of Kingston serves as a global hub the 1980s had expanded widely, with cruise lines building port for Zim Integrated Shipping Services and CMA ever-bigger ships and operating more ships, with new CGM, from which cargos are transshipped to the US companies appearing on the scene. The Carnival Destiny, eastern seaboard, Gulf ports and the wider Caribbean. which debuted in 1996, was the first cruise ship too large Sub-regional hub ports are secondary relay ports, such to transit the Panama Canal. These ultra-large cruise ships as Kingston Wharves Limited (KWL), Jamaica and Point are referred to as Post Panamax, having a capacity for over Lisas, Trinidad and Tobago, from which cargos are 2,500 passengers. As a result, the concept of cruising has, relayed to surrounding Caribbean islands. These ports within the last few decades, gradually shifted from being provide connections to wider geographic markets, such as merely a transportation base to floating resorts. the Far East and southeastern United States, from which cargos are filtered through the relay or sub-regional hub ports. Service ports are small ports serving specific islands Categories of Caribbean Ports with limited infrastructure and limited connection to larger ports. In the Caribbean, the schooner trade plays a Most Caribbean states are microstates, with a heavy significant role in the maritime network — in St. Vincent dependence on services such as tourism and offshore and the Grenadines and Dominica, for example. banking as the primary areas of economic activity. These states are also reliant on imports from North America and the Far East, supported with limited inter- and intra- regional trade (Pinnock, 2012). Given that import parcel sizes are small by global standards, they do not provide a large enough economic base to support the development of modern port facilities. Consequently, the concept of containerization has had a great impact on Caribbean small ports, which were designed to support colonial bulk importation of basic items and exportation of bananas and sugar. Caribbean countries have done their best to modernize old general cargo ports to accommodate newer container ships, further compounding the pressures these ports face.
The size of ships has constantly increased with improvements in technology. Increasingly, there are specialized container ships with no onboard container crane facilities, putting pressure on Caribbean ports to provide shore-based cranes and the supporting pier- side container-handling infrastructure. Consequently, the configuration of general cargo ports must change: large transit sheds, used primarily for storing sugar and bananas, need to be removed to create large open storage areas for container traffic.
Some states have strategically invested heavily in creating modern port infrastructure in an attempt to capitalize on their geographic location, by offering their services
Fritz H. Pinnock and Ibrahim A. Ajagunna | 5 THE CARIBBEAN PAPERS
Table 1: Global Shipment Hub Ports, Sub-regional Hub of this capital outlay could be recovered from shipping Ports and Service Ports companies and consignees.
Port Country Global Sub- Service Ports and maritime services play a vital role in Caribbean Hub Regional countries since 90 percent of imports and exports are Hub carried by sea (World Bank, 2007). The level of efficiency Port of Spain Trinidad * of these ports has a direct impact on overall cost. Lower Point Lisas Trinidad * levels of port efficiency and higher shipping costs result in higher import costs and reduce export returns, which Bridgetown Barbados * has had a negative impact on the competitiveness of Kingston Wharves Jamaica * the region’s economies. As mentioned previously, Limited globalization and global logistics and its enabling tools Kingston Container Jamaica * have also had a tremendous impact on maritime transport Terminal in the Caribbean. So, how does the Caribbean fit into this Caucedo Dominican * picture? Republic Rio Haina Dominican * The advent of the container revolution in the 1960s posed Republic the first challenge. At that time, Caribbean ports were Puerto Plata Dominican * characterized by finger piers and large transit sheds. Very Republic little was done to facilitate the new container paradigm, La Romana Dominican * which called for large, open spaces, shore-based cranes, Republic heavy-duty container handling equipment on land Boca Chica Dominican * and, later, a sophisticated computerized management Republic information system. Many countries treated this new Freeport Bahamas * container phenomenon as a passing wave, and continued Georgetown Cayman * with the old infrastructure, operational systems and St. John’s Antigua * mindset. Castries St. Lucia * Over the years, there has been poor connectivity between Vieux Fort St. Lucia * the Caribbean and the rest of the world. Trying to bridge Georgetown Guyana * this divide has brought about challenges and opportunities Havana Cuba * for the Caribbean to reinvent itself. One of the major Willemstad Curaçao * challenges facing the Caribbean shipping industry is the conflicting role of the customs department. In the Pointe-à-Pitre Guadeloupe * Group of Seven (G7) countries, for example, customs and excise taxes account for less than four percent of GDP, Source: Compiled by Fritz H. Pinnock and Ibrahim A. Ajagunna. while in the Caribbean, this figure exceeds 35 percent on average. The role of customs in G7 countries is Caribbean Ports: Challenges primarily to facilitate trade, while in the Caribbean it is to collect revenue. This reverse relationship has created an unhealthy trade atmosphere, both for the shipping and Following the terrorist attacks on the World Trade Center logistics industry, with high handling fees and reduced on September 11, 2001 and the subsequent implementation efficiency and productivity vis-à-vis other countries and of the International Ship and Port Facility Security Code, all regions (illustrated in tables 4–11, which outline the ports in the Caribbean were plunged into debt in order to productivity performance of various Caribbean ports). meet the stringent requirements, including installation of security perimeter fencing, state-of-the-art access control, security lighting in and around port facilities (major This would suggest that a holistic and united regional increase in electricity costs), water-side security patrol, approach to the shipping industry should be established in restriction of activities in and around port and vessel light of the global trends. The total population of Caribbean areas, and the installation of x-ray equipment for cargo countries barely amounts to six million, competing with a and equipment moving in and out of ports. Caribbean global population of six billion. It would, therefore, make ports had no costs recovery, as only a small percentage sense for the Caribbean region to come together to develop
6 | The Caribbean Maritime Transportation Sector: Achieving Sustainability through Efficiency The Centre for International Governance Innovation
a holistic and sustainable strategic maritime transportation on regional and global attributes and approaches. This plan to reposition the industry and maximize its value and has led to the decline in the role of governments in the contribution to regional growth and development. Several ports in recent years, but full privatization of ports has Caribbean countries use their limited resources to cater to not been widely adopted. Many countries still view some cruise and cargo shipping companies. During the cruise form of government intervention as being necessary to season (October to March), when many cruise ships are manage strategically significant port infrastructure, and redeployed to the Caribbean, productivity and efficiency inherently underscores the monopolistic characteristics figures for cargo operations are usually very low, while of port services in the Caribbean. Today, governments operation costs spike drastically (see Tables 6, 7 and 8). continue to play an important role in facilitating and This is because the cruise ships are given priority berthing managing competitive behaviour in port services, creating a consideration, while cargo ships are forced to load and contestable market structure through licences, concessions unload after cruise ships sail, between approximately and other management of port labour. Caribbean ports 4:00 p.m. and 7:00 a.m. Operations during this window have historically been at the forefront of labour movements attract premium overtime rates and, in turn, drive up the in the region, as the Caribbean trade union movement was price of goods. born and incubated in ports. Ports are considered a major employer of both skilled and unskilled labour, which is Another challenge facing the Caribbean is the lack of often compounded by political interferences. This meant standards for labour practices and operational efficiency the Caribbean has been plagued with high unemployment factors. For example, most ports in the region are labour in the face of a rigid and inflexible unionized system that intensive and operate on the basis of archaic restrictive is resistant to change. This has made it difficult for ports labour practices, such as the failure to reconfigure the to embrace technological advancement and productivity work week to have more flexible working hours and improvements, which would result in labour layoffs, allow for work to take place at night. This has led to intra- despite the overall potential for long-term economic island competition and global pressure now dictating that benefits. the Caribbean transform from being ancient, exclusive and private, to becoming just another node on the global Table 2, Port Management Models, divides ports into either logistics chain. It is important to also keep in mind that landlord or public service models. The landlord model the Caribbean is not homogenous and its transportation remains the dominant model for larger- and medium-sized infrastructures vary significantly between countries. ports. The landlord model is characterized by its mixed public-private orientation. Under this model, the port authority acts as the regulatory body and as the landlord, Structure and Models of Selected while port operations (especially cargo handling) are Caribbean Ports carried out by private companies. Examples of landlord ports are Rotterdam, Holland; Antwerp, Belgium; New York, United States; and since 1997, Singapore. The public The structure, organization and management arrangement service port model is characterized by the port authority of a port are influenced by a number of factors, including offering the complete range of services required for historical development (as discussed earlier), the socio- the functioning of the seaport system. The port owns, economic structure of a country, port location and the type maintains and operates every available asset and cargo of cargo handling and equipment. Most Caribbean ports handling is executed by labour employed directly by the are managed under the public service port model, which port authority. will be covered later. This arrangement is often inefficient, due to the lack of internal competition and user or market orientation. This structure also leaves the port vulnerable to government interference due to the dependence on government budgets, as well as to the value of customs to national budgets.
In port infrastructure today, best practice is focused on increased service levels, increased operational efficiency and improved allocation of public funds. Port terminals have become specialized in cargo handling services and have been integrated into global logistics chains, taking
Fritz H. Pinnock and Ibrahim A. Ajagunna | 7 THE CARIBBEAN PAPERS
Table 2: Port Management Models
Port Model Management Description Comments Kingston Landlord The Port Authority of Jamaica (PAJ) is a statutory body, with a semi-autonomous There is a conflict of interest as the PAJ Container board. It has been appointed by the government to act in the interest of the port is the regulator of all ports throughout Terminal, by setting port tariffs and negotiating individual tariffs with shipping lines. the islands and yet operates in direct Jamaica The PAJ also owns some of the superstructure assets, such as cranes at the competition with KWL for regional transshipment terminals. Concessionaires or contractors operate the assets, container traffic. cargo handling and other activities in the port. Up to February 2009, APM Terminal Limited and AP Moller-Maersk Group operated the transshipment terminal. This model of structural separation has improved the port’s efficiency. Labour concessions and improved terminal management and equipment have enabled improvements in productivity. For example, negotiations in 1998 reduced the average port gang size from 21 to eight people and introduced flexible staffing hours. The exception to this agreement is stevedoring labour, which continues to employ a pool system through the Shipping Association of Jamaica, and the pilotage service run by a private contractor composed of former PAJ staff. The PAJ owns the port tugs, but they are operated by a private company. Finally, private facilities at KWL compete to serve local and regional traffic. Rio Haina, Landlord The port of Rio Haina was established as a landlord port following the enactment The port is landlocked in the city, Dominican of the Port Law in the 1970s, which was aimed at reforming the sector. The Port leaving no room for expansion and Republic Authority of the Dominican Republic sets overall policies and tariffs and grants productivity improvement, losing concessions. The governing board is comprised of public and private members and continuing to lose customers to who represent business organizations such as the shipping agents association Caucedo and other more efficient ports. and the National Industrial Association. Competition for traffic volumes intensified when a new privately owned terminal was established at Caucedo. Bridgetown, Landlord The Bridgetown port has moved from the public service to the landlord model. The port is plagued with restrictive Barbados The Barbados Port Authority has been replaced by the newly incorporated practices, in particular labour. Barbados Port Inc., and draft legislation sets a framework for port regulation and Competition between cruise and cargo grants the company certain rights as a warehouseman and harbour authority. vessels results in cargo vessels working Barbados Port Inc. oversees marine operations, owns the port superstructure, nights after cruise vessels sail during and is also involved in cargo operations. There is no competition for local traffic the winter season. Cargo vessels are among the ports in the country. charged overtime rates, thereby adding to the overall cost to cargo vessels and, ultimately, these are passed on to consumers. Port of Landlord The Port Authority of Trinidad and Tobago was established in 1961. It has Port of Spain is landlocked and new Spain and responsibility for operating the main port at Port of Spain and regulating other business is being diverted to Point Lisas. Point Lisas, ports and controlling their existence and the cargo they handle. It is government Trinidad owned and has a government-appointed board. Of the approximately 50 ports and Tobago on the wharves in Trinidad and Tobago, the principal international ports are Port of Spain and Point Lisas. Most of the others are private special purpose (for example, bulk) wharves. Point Lisas is 51 percent government owned, but falls outside of the Port Authority control. As a result of its more efficient service, it has become the preferred port for many businesses. Castries and Public These two ports are structured according to the public service model, in which Vieux Fort, service the government owns and operates all aspects of the port. In St. Lucia, the ports St. Lucia port at Castries and Vieux Fort are administered by the St. Lucia Air and Sea Ports Authority (SLASPA), a government body with a government-appointed board. A subsidiary company, St. Lucia Marine Terminals Limited, has operated Vieux Fort for SLASPA since 1995. There is little private involvement in any service operation at the port. The role of transshipment business has been given to the separately operated Vieux Fort. St. Georges, Public The port is run by a statutory body and has a board that is appointed by the Granada service minister of finance. There is no private ownership or operation of services at this port port and no competition for traffic from other local ports. Like Castries, the port at St. Georges is run by a statutory body. These ports could be well positioned for transshipment businesses, although this may require some structural reforms to increase levels of efficiency at the ports. Georgetown, The port consists of 11 independently operated wharves. It is government Ports are adversely affected by tidal Guyana owned, managed by the Guyana National Shipping Corporation movement. Guyana needs stronger port regulatory machinery.
Source: Compiled by Fritz H. Pinnock and Ibrahim Ajagunna.
8 | The Caribbean Maritime Transportation Sector: Achieving Sustainability through Efficiency The Centre for International Governance Innovation
Table 3: Strengths and Weaknesses of the Landlord and Public Service Models
Landlord Model Public Service Model Strengths - A single entity executes cargo handling operations - Superstructure development and cargo handling operations are the and owns and operates cargo handling equipment. The responsibility of the same organization (unity of command). terminal operators are more loyal to the port and more likely to make needed investments as a consequence of their long-term contracts. - Private terminal handling companies are generally better able to cope with market requirements. Weaknesses - Risk of overcapacity as a result of pressure from various - There is no role or only a limited role for the private sector in cargo private operators. handling operations. - Risk of misjudging the proper timing of capacity - There is less problem solving capability and flexibility in case of labour additions. problems, since the port administration is also the major employer of port labour. - There is a lack of internal competition, leading to inefficiency. - Wasteful use of resources and underinvestment as a result of government interference and dependence on government budget. - Operations are not user or market oriented. - Lack of innovation. - No, or limited, access to public funds for basic infrastructure.
Source: The International Bank for Reconstruction and Development, The World Bank, 2007.
Port Regulatory Framework Transshipment
Throughout the Caribbean, the port authorities have Transshipment business helps ports and shipping lines typically retained a regulatory function. In the Dominican generate economies of scales, which can expand a ports’ Republic and Jamaica, for example, the port authority market and lower its costs. The ports of Kingston, Jamaica sets the port tariffs. In many other countries, the ports and Freeport, Bahamas are good examples of the way in enter into contracts with port management companies on which transshipment adds economies of scale beyond that negotiated terms. In Trinidad and Tobago, regulations which local business will permit. For countries astride are in place to control various types of cargo handled. major trade routes, transshipment of foreign cargo can Allocating traffic among ports and wharves is a traditional be a major part of their operations. This is, in effect, the form of regulation and is coming under pressure from business of exporting services that generate income for the ports that need to expand, but also maintain operational country by exploiting and maximizing a natural resource flexibility. (geographic location) that never becomes depleted. This form of transshipment involves consignments or In several Caribbean countries, the lines between containers with neither origination nor destination within regulatory functions and competitive operations are often the region. nebulous. In Jamaica, for example, the PAJ, a statutory body charged with regulating all ports, including granting Ports in the Caribbean sit at the intersection of the major wharfage and storage tariff rates and increases, is also in round-the-world, East-West trade routes linking Asia, direct competition with KWL on the operation side. In an America, Europe and the Middle East, and the important interview, executives at KWL alluded to the PAJ using North to South routes between North and South America, its regulatory powers to achieve competitive advantage. and South America and Europe. Shipping lines find it Similar occurrences take place in Trinidad, but in a less economical to line haul to the Caribbean, and transship to obvious manner. Most of the other Caribbean countries vessels serving different destinations. Other transshipment have only one port, with the exception of St. Lucia, with ports competing for global hub port status outside of Vieux Fort and Castries. Kingston Container Terminal in Jamaica, include Caucedo, Dominican Republic, and Freeport, Bahamas. Investment in major transshipment ports is risky in that 90 percent
Fritz H. Pinnock and Ibrahim A. Ajagunna | 9 THE CARIBBEAN PAPERS
of the cargo volumes moving in and out of the ports followed by Nassau, Bahamas. In eleventh position was are transshipment. Risk here relates to the fact that the Grand Turks, Turks and Caicos, achieving an average transshipment portion can move overnight to competing 4.78 berth moves per hour. From the statistics, KWL, ports (such as those in Panama and Columbia), as they are Jamaica achieved the highest berth moves per hour over not tied to domestic ports. the period,with the exception of March and May 2008. In March 2008, Castries, St. Lucia got the number one spot with 15.05 berth moves per hour. This was followed by Ranking of Caribbean Port Georgetown, Cayman Island with 14.45 berth moves per Productivity hour ahead of KWL in the number three position with 14.43 berth moves per hour. In May 2008, Vieux Fort, St. Lucia achieved 19.36 berth moves per hour behind KWL, Table 4 represents Caribbean ports’ productivity for Jamaica with 25.76 berth moves per hour. This supports the January to December 2008, per berth moves. These are thesis that by virtue of handling larger volumes of cargo ports that predominantly use mobile cranes in their load and larger ships, sub-regional hub ports such as KWL, and discharge operations. KWL appears to be the most Jamaica, have higher productivity levels. Productivity productive port with a year-to-date average of 17.73 berth levels, measured in berth moves per hour, are one of the moves per hour. This is 63.4 percent ahead of Georgetown, competitive factors that determine whether business stays Cayman Islands, which is ranked number two in this or moves to other competing sub-regional ports. All the port sub-group. In third position is Castries, St. Lucia, other ports in this category are service ports.
Table 4: Caribbean Productivity by Berth Equipment Type (Berth Moves per Hour) — Mobile Cranes Year Port/Country Average Moves per Month Avg. Jan. Feb. March April May June July August Sept. Oct. Nov. Dec. KWL, Jamaica 22.66 16.79 14.43 17.86 15.76 17.58 17.64 18.88 16.60 18.07 19.56 20.22 17.73 Georgetown, 11.64 14.27 14.45 13.36 14.24 7.31 8.58 7.47 8.83 13.77 16.80 15.43 11.24 Cayman Islands Castries, St. 10.98 14.38 15.05 13.48 7.67 11.96 8.64 13.44 6.10 13.63 13.17 14.38 11.08 Lucia Vieux Fort, St. 11.13 N/A N/A N/A 19.36 N/A N/A N/A 8.21 9.95 8.72 7.81 9.84 Lucia Nassau, 12.83 8.63 7.92 9.29 9.09 7.99 14.97 17.00 7.08 15.20 16.50 13.17 10.93 Bahamas Port-au-Prince, 11.24 9.24 7.22 8.77 16.38 8.14 8.12 8.00 10.05 10.79 11.95 12.36 10.07 Haiti St. John’s, 11.34 13.82 11.93 13.88 15.64 5.27 6.90 5.34 5.67 11.68 15.38 13.01 9.13 Antigua Montego Bay, 7.42 6.45 12.47 9.62 10.51 9.43 8.22 10.59 4.04 5.48 5.70 10.73 8.67 Jamaica Providenciales, 13.34 13.04 11.00 10.84 10.82 4.50 6.57 6.15 5.97 11.94 12.07 12.07 8.51 Turks and Caicos Grand Turk, 5.13 4.36 4.65 4.49 4.82 2.10 N/A 4.48 4.86 7.31 9.18 5.92 4.78 Turks and Caicos Phillipsburg, St. 9.67 8.43 8.70 5.84 8.19 4.97 3.22 5.29 3.28 8.05 8.42 6.17 6.12 Maarten
Source: Adapted from Florida Ship Owners’ Group, 2008.
10 | The Caribbean Maritime Transportation Sector: Achieving Sustainability through Efficiency The Centre for International Governance Innovation
Table 5 shows productivity for the same time period for Middle East and Europe, they are 50 to 60 percent below ports that depend on gantry cranes. KCT recorded the their productivity targets. The Caribbean has a long way highest average berth moves per hour (19.80) for the year to go in achieving global productivity standards. 2008. This was 59.9 percent ahead of second place Point Lisas, Trinidad’s average of 11.86 berth moves per hour. Table 6 categorizes ports that depend on ships crane/RO/ KCT tops the table for every single month, with its highest RO in their daily operations. It is traditional to categorize productivity average recorded in January 2008 with 30.05 these ports as the least productive and least developed berth moves per hour, and its lowest in September 2008, among the three categories. However, Georgetown, of 16.75 berth moves per hour. Barbados took the fourth Guyana achieved a respectable 12.43 average berth spot with an average of 7.72 berth moves per hour. KCT, moves per hour for 2008. This was ahead of Paramaribo, the only global transshipment port in this category, with Suriname, with a credible 11.98 berth moves per hour. the largest inventory of straddle carriers and Super-Post Georgetown, Guyana, achieved the highest berth move Panamax gantry cranes, is far more efficient than the per hour with the exception of the months of August, smaller sub-regional hub ports. As a global transshipment October and December 2008. All the ports in this category port, it specializes in containerized cargo while other are service ports. Very little has been done to the physical general cargo are directed to other sub-regional hub ports infrastructure, as parcel sizes of cargo are small. Guyana such as KWL, and service ports such as Montego Bay. The and Surinam are different from all other ports in that they larger containerized vessels calling at global hub ports generate significant export cargos, providing a balance are far more stable and designed for greater efficiency in between import and export. This balance allows them cargo handling operations, thereby accounting for higher to achieve greater operational efficiency as the loaded efficiency levels. Although productivity levels displayed containers removed can be replaced by loaded containers by KCT are significantly higher than the other competing for export. ports when compared to global hub ports in the Far East,
Table 5: Caribbean Productivity by Berth Equipment Type (Berth Moves per Hour) — Gantry Cranes Port/Country Average Moves per Month Year Avg. Jan. Feb. March April May June July August Sept. Oct. Nov. Dec. KCT, Jamaica 30.05 N/A 21.37 18.24 24.40 20.54 17.21 19.14 16.75 20.92 20.85 18.89 19.80 Point Lisas, 7.77 13.85 15.44 14.47 11.95 11.45 10.60 9.86 10.06 13.26 12.82 17.59 11.86 Trinidad Port of Spain, 14.14 N/A N/A N/A 17.76 N/A N/A N/A 6.56 8.51 9.53 27.81 10.98 Trinidad Bridgetown, 14.46 14.97 13.45 12.85 13.33 7.26 6.51 6.92 1.78 11.72 9.58 13.29 7.72 Barbados
Source: Adapted from Florida Ship Owners’ Group, 2008.
Fritz H. Pinnock and Ibrahim A. Ajagunna | 11 THE CARIBBEAN PAPERS
Table 6: Caribbean Productivity by Berth Equipment Type (Berth Moves per Hour) — Ships’ Crane/RO/RO
Year Port/Country Average Moves per Month Avg. Jan. Feb. March April May June July August Sept. Oct. Nov. Dec. Georgetown N/A N/A 12.25 14.75 13.73 13.55 13.50 12.97 14.03 11.95 14.26 6.78 12.43 Guyana Paramaribo, N/A N/A 11.40 14.18 10.79 10.29 9.75 13.09 13.13 13.09 13.57 11.69 11.98 Suriname Roseau, 5.26 7.96 11.33 12.31 5.16 9.48 12.17 12.07 9.49 9.94 7.20 10.85 8.93 Dominica Freeport, 8.09 7.75 8.48 8.39 7.82 7.75 7.21 4.29 6.78 8.14 8.46 8.72 7.42 Bahamas St. Georges, 6.38 N/A 8.45 8.05 7.27 9.10 7.90 5.52 6.00 6.78 7.15 7.68 7.13 Granada Kingstown, St. 2.55 7.58 6.71 7.28 5.70 8.06 6.15 6.58 7.64 8.61 8.67 7.00 6.53 Vincent Road Town, N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 6.34 6.34 Tortola Basseeterre, 5.08 9.34 8.51 7.92 7.01 8.22 6.62 5.10 3.37 6.07 7.34 8.76 6.26 St. Kitts
Source: Adapted from Florida Ship Owners’ Group, 2008.
Table 7 speaks to an overall ranking of all 22 ports ranked among the top mobile cranes, caught the number regardless of stevedoring equipment (gantry crane, mobile two spot overall ahead of Port of Spain and Point Lisas, cranes and ships crane/RO/RO). The table does not which are competing regional hub ports. KWL uses state- include Bahamas transshipment terminal and Caucedo, of-the-art mobile harbour cranes, along with an advanced Dominican Republic, as these ports are dedicated management information system and tight operation international transshipment facilities. The productivity procedures. Furthermore, it operates in a tough private figures presented in the tables show that gantry cranes sector environment, having to compete daily with the are the most productive, followed by mobile cranes and global container transshipment port KCT, its next door ships’ cranes/RO/RO as the least productive. KCT was neighbour. the most productive port. Interestingly, KWL, which was
12 | The Caribbean Maritime Transportation Sector: Achieving Sustainability through Efficiency The Centre for International Governance Innovation
Table 7: Average Moves per Berth Hour (January–December 2008) for the Caribbean
Year Port/Country Rank Average Moves per Berth Hour Avg. Jan. Feb. March April May June July August Sept. Oct. Nov. Dec. KCT, Jamaica 1 30.05 21.37 18.24 24.40 20.54 17.21 19.14 16.75 20.92 20.85 18.89 19.80 KWL, Jamaica 2 22.66 16.79 14.43 17.86 15.76 17.58 17.64 18.88 16.60 18.07 19.56 20.22 17.73 Georgetown, Guyana 3 12.25 14.75 13.73 13.55 13.50 12.97 14.03 11.95 14.26 6.78 12.43 Paramaribo, 4 11.40 14.18 10.79 10.29 9.75 13.09 13.13 13.09 13.57 11.69 11.98 Suriname Point Lisas, Trinidad 5 7.77 13.85 15.44 14.47 11.95 11.45 10.60 9.86 10.06 13.26 12.82 17.59 11.86 Georgetown, 6 11.64 14.27 14.45 13.36 14.24 7.31 8.58 7.47 8.83 13.77 16.80 15.43 11.24 Cayman Islands Castries, St Lucia 7 10.98 14.38 15.05 13.48 7.67 11.96 8.64 13.44 6.10 13.63 13.17 14.38 11.08 Port of Spain, 8 14.14 17.76 6.56 8.51 9.53 27.81 10.98 Trinidad Port-au-Prince, Haiti 9 11.24 9.24 7.22 8.77 16.38 8.14 8.12 8.00 10.05 10.79 11.95 12.36 10.07 Vieux Fort, St. Lucia 10 11.13 19.36 8.21 9.95 8.72 7.81 9.84 St. John’s, Antigua 11 11.34 13.82 11.93 13.88 15.64 5.27 6.90 5.34 5.67 11.68 15.38 13.01 9.13 Roseau, Dominica 12 5.26 7.96 11.33 12.31 5.16 9.48 12.17 12.07 9.49 9.94 7.20 10.85 8.93 Montego Bay, 13 7.42 6.45 12.47 9.62 10.51 9.43 8.22 10.59 4.04 5.48 5.70 10.73 8.67 Jamaica Providenciales, Turks 14 13.34 13.04 11.00 10.84 10.82 4.50 6.57 6.15 5.97 11.94 12.07 12.07 8.51 and Caicos Bridgetown, 15 14.46 14.97 13.45 12.85 13.33 7.26 6.51 6.92 1.78 11.72 9.58 13.29 7.72 Barbados Freeport Bahamas 16 8.09 7.75 8.48 8.39 7.82 7.75 7.21 4.29 6.78 8.14 8.46 8.72 7.42 St. Georges, Granada 17 6.38 8.45 8.05 7.27 9.10 7.90 5.52 6.00 6.78 7.15 7.68 7.13 Kingstown, St. 18 2.55 7.58 6.71 7.28 5.70 8.06 6.15 6.58 7.64 8.61 8.67 7.00 6.53 Vincent Road Town, Tortula 19 6.34 6.34 Basseterre, St. Kitts 20 5.08 9.34 8.51 7.92 7.01 8.22 6.62 5.10 3.37 6.07 7.34 8.76 6.26 Phillipsburg, St. 21 9.67 8.43 8.70 5.84 8.19 4.97 3.22 5.29 3.28 8.05 8.42 6.17 6.12 Maarten Grand Turk, Turks 22 5.13 4.36 4.65 4.49 4.82 2.10 - 4.48 4.86 7.31 9.18 5.92 4.78 and Caicos
Source: Adapted from Florida Ship Owners’ Group, 2008.
Drawing from the data in Table 7, it is clear that factors In a study done in 1980 on the Fortune 500 companies, besides equipment type, including human factors, 70 percent indicated that their greatest asset was their management of operations and the logistics of terminal physical assets, such as property and equipment. In a and integrated information technology, impact the repeat study in 2007, over 60 percent of the companies that productivity levels at the various ports in the Caribbean. had held this view were no longer a part of the Fortune The top two ports in Table 7 have invested heavily not just 500 list. Seventy-six percent of the respondents in the 2007 in hardware stevedoring equipment, but also in training study pointed to human capital as their greatest asset. This and development of their work force and in advancing suggests that the Caribbean is no longer a quiet corner information technology infrastructure in the industry. where each country can, in effect, manipulate their local industry while ignoring global forces. Today, the market is controlled by the customer who demands greater value, which in turn calls for more informed and better-trained
Fritz H. Pinnock and Ibrahim A. Ajagunna | 13 THE CARIBBEAN PAPERS
personnel. This places pressure on Caribbean ports to move exceed the total load-on and discharge time. As Table beyond the basic role of receiving, storing and delivering 8 shows, Roseau, Dominica, is the most accessible port cargoes, to becoming an integrated member of the global followed by Freeport, Bahamas and then Vieux Fort, St. supply chain. It is now time for the Caribbean to make Lucia. The Caribbean’s top two ports overall — KCT plans to train and certify its human resources, placing and KWL — are ranked sixth and tenth respectively. the same importance on training personnel as acquiring The two lowest-ranked ports are Point Lisas, Trinidad and deploying cutting-edge equipment. Barbados is one and Paramaribo, Suriname. Georgetown, Guyana, the country that has accepted this reality, evidenced by its plan port ranked third overall in the Caribbean, only placed to train and certify its stevedoring labour in a partnership fourteenth. Interestingly, ports in Georgetown, Guyana agreement with the Caribbean Maritime Institute (CMI) and Paramaribo, Suriname are tidal ports, and can only in Jamaica. This makes Barbados the first country in the be accessed at high tide with large container vessels. This Caribbean to undertake such an initiative. can add an additional six to 12 hours to the wait time, in order to allow for low and high tide changes. Working Table 8 highlights the average time a vessel has to with these limitations, these ports utilize every possible wait to access Caribbean ports. As a common maritime productive advatage and with the lack of interference of expression goes, “A ship in dock is a wasted ship.” Ships active trade unions, as in the case of Port of Spain, Point are expensive assets that make money while sailing — not Lisas and Barbados, they are able to turn around vessels in lying in port. In several instances, this waiting time can a much shorter time.
Table 8: Average Time Awaiting Berth for Caribbean Ports (January–December 2008) Year Port/ Country Rank Average Time Await Berth Avg. Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec. Roseau, Dominica 1 0:33 3:49 0:21 0:25 0:19 0:18 0:18 0:17 0:18 0:24 0:16 0:16 0:37 Freeport Bahamas 2 1:12 0:33 0:22 0:23 0:27 0:21 0:17 0:27 0:59 1:34 1:08 1:11 0:42 Vieux Fort, St. Lucia 3 0:48 N/A N/A N/A 0:51 N/A N/A N/A 0:34 0:42 1:03 0:31 0:46 Road Town, Tortola 4 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 1:01 1:01 Castries, St Lucia 5 0:28 1:57 0:36 1:11 0:31 0:47 1:29 0:31 0:34 1:58 2:11 2:00 1:14 KCT, Jamaica 6 1:52 N/A 0:13 0:27 0:25 0:43 0:28 0:25 0:52 3:10 3:26 2:44 1:24 Montego Bay, Jamaica 7 5:04 2:04 0:47 0:53 0:52 0:47 0:55 0:57 0:42 0:40 0:40 0:55 1:24 Basseterre, St. Kitts 8 0:10 2:06 6:43 2:45 0:20 0:21 0:18 0:35 0:33 2:06 0:55 0:33 1:25 St. John’s, Antigua 9 1:54 1:48 3:09 0:56 3:29 0:41 0:44 1:02 1:35 2:01 0:55 0:37 1:35 KWL, Jamaica 10 1:30 1:25 1:25 1:22 3:07 1:12 1:10 2:22 1:13 1:41 1:30 1:17 1:40 Kingstown, St. Vincent 11 4:34 0:35 0:27 0:23 0:56 0:24 0:38 6:54 1:54 1:10 1:02 1:06 1:42 St. Georges, Grenada 12 0:48 N/A 0:33 0:59 0:26 0:32 2:53 3:56 0:59 1:41 2:45 1:27 1:46 Georgetown, Cayman Islands 13 2:54 0:58 3:58 0:42 1:17 1:02 1:55 1:13 2:51 3:41 1:27 7:17 2:25 Georgetown, Guyana 14 N/A N/A 2:26 3:12 1:48 3:45 1:03 0:47 2:01 2:32 3:14 6:35 2:57 Bridgetown, Barbados 15 23:43 0:58 2:30 1:28 1:33 1:44 0:41 0:49 1:12 0:58 1:57 2:47 3:04 Port of Spain, Trinidad 16 2:18 N/A N/A N/A 7:17 N/A N/A N/A 12:26 1:15 0:51 0:50 3:10 Phillipsburg, St. Maarten 17 5:39 1:17 4:20 4:25 1:34 2:32 1:18 3:39 5:39 1:47 3:34 1:32 3:11 Port-au-Prince, Haiti 18 1:47 1:16 0:57 4:12 5:45 10:33 1:37 1:55 5:58 2:11 3:03 12:00 3:35 Grand Turk, Turks and Caicos 19 0:11 0:16 0:15 0:10 0:09 0:31 N/A 1:15 0:42 0:24 7:01 21:17 3:45 Providenciales, Turks and Caicos 20 1:43 3:09 6:10 4:07 3:40 9:23 2:47 1:46 1:36 1:51 1:59 3:54 3:47 Point Lisas, Trinidad 21 8:22 2:36 3:11 2:46 1:29 3:54 4:41 15:14 6:38 9:30 4:10 2:18 5:30 Paramaribo, Suriname 22 N/A N/A 0:52 27:00 2:16 16:20 3:26 6:48 7:19 11:07 12:21 7:51 8:24
Source: Adapted from Florida Ship Owners’ Group, 2008.
14 | The Caribbean Maritime Transportation Sector: Achieving Sustainability through Efficiency The Centre for International Governance Innovation
Liner Shipping Connectivity Index: A in ships. In 2007, world seaborne trade increased by 4.8 percent to surpass eight billion tons for the first time Global Perspective (UNCTAD, 2007).
The question of who trades what with whom depends not By the beginning of 2008, the total world merchant fleet only on the demand and supply of goods, but also on the had expanded by an impressive 7.2 percent, to reach 1.12 ability to deliver the goods to the market. Geographical billion deadweight tons, and the average age of the world factors such as distance, the degree to which a country is fleet had dropped marginally, to 11.8 years. Container landlocked, as well as transportation costs affect this ability. ships made up the youngest fleet, with an average age of Another important, yet often neglected, determining factor nine years. By May 2008, the world container ship fleet for trade competitiveness is transport connectivity, defined had reached approximately 13.3 million TEUs, of which as access to regular and frequent transport services. 11.3 million were on fully cellular container ships. This Except for bulk commodities, most intercontinental trade fleet included 54 container ships of 9,000 TEUs and above. is conveyed by liner shipping services. Access to liner shipping services determines competitiveness in addition to the geography of trade. Possible indicators for the LSCI in the Caribbean supply of liner shipping services include number of available ships serving the region, TEU capacity, number Table 9 shows the LSCI for the Caribbean between 2004 of shipping companies and services they offer, as well as and 2010. During the period from 2004 to 2008, the maximum ship size. A distinction also needs to be drawn Dominican Republic improved its connectivity level by between direct services and those requiring transshipment. 60.3 percent, which increased its ranking from 58 in 2004 To measure connectivity per country, the United Nations to 37 in 2008. This was the most significant improvement Conference on Trade and Development (UNCTAD) has, in the Caribbean, and was due largely to the opening of since 2004, produced a Liner Shipping Connectivity Index the Caucedo port, thereby attracting global carriers such (LSCI), which combines available information about fleet as Mediterranean Shipping Company and Hapag-Lloyd, assignment, liner services, and vessel and fleet sizes per among others. Between 2008 and 2010, however, the country, in order to provide a measure of a country’s Dominican Republic slipped back to the number three integration in the global shipping network and, thus, its position, moving from 37 in 2008 to 49 in 2010. Jamaica, on trade competitiveness. the other hand, was able to move up to regain the number one position, moving from number 41 in 2008 to number According to the LSCI, most of the least-connected countries 32 in 2010. Similarly, Bahamas, which was ranked number are developing countries, and a majority of them are small 49 in 2008, improved by approximately 6.5 percent, island developing states (SIDS). Whereas 75 percent of the moving to the number two spot at number 46 in 2010. The top 20 best-connected countries recorded an improved global transshipment hub ports have the highest level of LSCI between 2004 and 2006, only 30 percent of the 20 least- connectivity to the global supply chain, followed by the connected countries recorded an improvement during the sub-regional hubs and then the service ports. The three same period. Hence, the “connectivity gap” between the least-connected Caribbean ports in 2010 were Cayman best- and least-connected countries is increasing. This is Islands, Antigua and Barbuda, and Dominica, which were a concern for the Caribbean, as its nations are important ranked at 152, 153 and 155 respectively. constituents of the SIDS grouping.
An analysis of recent trends found that the number of ships, the maximum ship size and the total TEU capacity deployed per country have all increased since 2004, while the number of services and companies, as an indicator of competition, have decreased.
International seaborne trade (goods loaded) in 2007, driven by emerging and transition economies, surpassed a record eight billion tons. More than 80 percent of international trade in goods is carried by sea, and an even higher percentage of developing-country trade is carried
Fritz H. Pinnock and Ibrahim A. Ajagunna | 15 THE CARIBBEAN PAPERS
Table 9: LSCI in the Caribbean
2010 2008 2006 2004 Change 2010 Rank Country LSCI Rank LSCI Rank LSCI Rank LSCI Rank 32 Jamaica 33.09 32 24.61 41 23.02 37 21.32 33 11.77 46 Bahamas 25.71 46 19.83 49 16.19 51 17.49 42 8.22 49 Dominican Republic 22.25 49 26.49 37 15.19 53 12.45 58 9.80 65 Trinidad and Tobago 15.76 65 17.42 56 11.18 67 13.18 52 2.58 96 Netherland Antilles 7.97 96 10.22 80 7.82 91 8.16 88 -0.19 100 Haiti 7.58 100 4.16 131 2.91 143 4.91 117 2.67 103 Cuba 6.57 103 7.76 95 6.43 99 6.78 96 -0.21 117 Aruba 5.34 117 6.14 105 7.53 92 7.37 90 -2.03 129 Barbados 4.20 129 6.41 102 5.34 107 5.47 108 -1.27 132 Surinam 4.12 132 5.32 114 3.90 131 4.77 120 -0.64 134 Belize 3.95 134 3.36 143 2.62 146 2.19 149 1.76 135 Guyana 3.95 135 5.36 113 4.60 119 4.54 123 -0.59 136 Saint Lucia 3.77 136 5.09 116 3.43 133 3.70 131 0.07 139 St. Vincent and the Grenadines 3.72 139 5.45 110 3.40 134 3.56 133 0.07 140 Grenada 3.71 140 4.74 119 3.37 135 2.30 148 1.41 149 St. Kitts and Nevis 2.84 149 7.91 93 5.59 105 5.49 107 -2.64 152 Cayman Islands 2.51 152 3.21 146 1.79 156 1.90 153 0.61 153 Antigua and Barbuda 2.40 153 4.36 124 2.43 148 2.33 145 0.07 155 Dominica 1.88 155 3.26 144 2.33 150 2.33 146 -0.44
Source: UNCTAD (2011).
The LSCI is calculated using five components: Deployment of Container Carrying Capacity (TEU) • deployment of container ships; • deployment of container carrying capacity in TEUs; This is the number of slots for TEUs in a country. Given the growing average size of container ships, TEU deployment • the number of liner shipping companies; tends to grow faster than vessel deployment. • the number of services; and • the maximum ship size, always referring to the ships Number of Liner Shipping Companies that are deployed to provide liner shipping services to a country’s port. The downward trend in the number of liner shipping companies continued in 2008 due to mergers and Deployment of Container Ships acquisitions as well as an overall trend towards consolidation. The average number of liner shipping Fleet deployment is the number of ships that national companies providing services per country has also and international liner shipping companies assign to liner declined. services from and to a country’s ports. A larger number of ships indicates that a country’s shippers have more opportunities to load their containerized exports, that is, they are better connected to foreign markets.
16 | The Caribbean Maritime Transportation Sector: Achieving Sustainability through Efficiency The Centre for International Governance Innovation
Table 10: Trade Routes, Vessel Capacity and Number of Ships Serving the Caribbean
No. Trade Routes No. of Vessels Total Capacity (TEU) Average Size of Vessel (TEU) 1 Far East to Europe 330 2,234,943 7,000 2 Far East to US West Coast 358 1,828,366 5,000 3 Caribbean/Central America to South America 121 204,448 1,700 4 Caribbean /Central America to North America West Coast 64 240,217 3,800 5 Caribbean/Central America to North America Gulf 58 110,282 1,900 6 Caribbean /Central America to South America (West Coast) 58 129,764 1,000 7 Caribbean/Central America to South America (East Coast) 56 132,298 2,400 8 Caribbean to Europe 54 84,040 1,600 9 Intra Caribbean to Central America 25 17,212 700 10 Caribbean to Mediterranean 21 30,090 1,500 11 South Africa to Caribbean/Central America 7 19,503 2,700 12 Australia to Caribbean/Central America 6 13,622 2,300 13 Caribbean/Central America to North/South Pacific 6 13,622 2,300
Source: Compiled by Fritz H. Pinnock and Ibrahim A. Ajagunna.
From a global perspective, there are two major trade larger vessels are engaged in these two trade routes, giving routes — namely, Far East to Europe and Far East to US greater economies of scale per container transported. West Coast. At the end of 2008, there were just under Interestingly, it is often less costly to import a container 700 vessels servicing these markets. While the actual from China to Kingston, Jamaica, than to move a container number of vessels may have decreased over the past from Kingston, Jamaica to Aruba. This point suggests that five years, the average size of the vessels has been rising it is more cost effective to move cargo between a regional sharply. Today, the Far East to Europe average vessel hub port and global hub port than between two service size is approximately 7,000 TEU, and the Far East to US ports in different Caribbean regions. West Coast stands at 5,000 TEU. At the other end of the spectrum, the Intra Caribbean vessels average only 700 Globally, there are 9,494 container ships with a total TEU. This is due, in part, to the fact that the number one carrying capacity of 14,534,657 TEU. There were 1,265 industry in the Caribbean, tourism, has little or no physical new ships on order at the beginning of January 2009, product to export. Hence, maritime transport is priced on representing a mere 13 percent increase in actual number a one-way movement (import of cargo and empty return of ships. However, the total capacity on order is 5,855,430, of containers). This creates an imbalance in trade, which representing a 40.3 percent increase in global carrying makes it uneconomical to operate vessels far in excess of capacity. Over 95 percent of the new vessels on order the average minimum size of 700 TEU, as more than 50 are in excess of 4,000 TEUs, which would make them too percent of the time, vessels are deployed with empty non- large to service the Caribbean. This would, therefore, call freight paying container repositioning movement. Most of into question the sustainability of Caribbean maritime these smaller vessels have older tonnages, with high fuel transportation, as the smaller fleet capable of serving consumption per TEU and high maintenance costs. the region is aging and more difficult to operate on economically viable terms in the face of technological Drawing from Containerisation International statistics, at advancements and escalating operating costs, such as fuel, the end of 2008, a total of 476 ships served the Caribbean, maintenance and labour. over 90 percent of which were involved in transshipment cargo movement, which is limited to larger ports such as Kingston, Jamaica; Freeport, Bahamas; and Caucedo, Dominican Republic. Over the last decade, there has been a shift in trade away from North America, Canada and northwest Europe towards direct sourcing from the Far East and South America. Table 11 supports the fact that the
Fritz H. Pinnock and Ibrahim A. Ajagunna | 17 THE CARIBBEAN PAPERS
Table 11: Global Ranking of Caribbean Container Ports by TEU (2007–2009)
Country Ports 2009 2008 2007 Rank TEU Rank TEU Rank TEU Trinidad and Tobago Port of Spain 162 403,000 149 385,000 184 358,541 Point Lisas 256 164,183 197 175,000 268 156,016 Barbados Bridgetown 422 21,868 126 57,189 304 99,626 Jamaica Kingston 62 1,689,670 58 1,915,951 53 2,016,792 Dominican Republic Caucedo 99 906,279 136 463,172 140 574,441 Rio Haina 204 277,949 201 167,151 222 248,695 Puerto Plata N/A N/A 281 21,721 393 38,306 La Romana N/A N/A 313 326 495 852 Boca Chica 455 10,985 280 10,616 432 20,207 Santa Domingo 414 23,799 N/A N/A N/A N/A Bahamas Freeport 76 1,297,000 67 1,580,000 71 1,634,000 Antigua and Barbuda St. John 394 29,150 270 17,333 400 34,081 St. Lucia Castries 392 30,186 264 35,915 394 36,117 Vieux Fort 423 21,756 247 38,190 434 19,465 Cayman Islands Georgetown 384 33,072 265 35,162 362 49,415 Cuba Havana N/A N/A N/A N/A 195 319,857 Curacao Willemstad 307 97,913 133 52,035 310 97,271 Guadeloupe Pointe-à-Pitra 273142,692 196 170,729 259 168,839
Source: Containerisation International (2011).
underutilized) vessels, directly affecting per-unit shipping Toward Regional Sustainability and costs. While this is a difficult “chicken-and-egg” problem, Efficiency measures can, nevertheless, be taken to improve port cost efficiency and increase cargo flows. Barbados, for Ninety percent of Caribbean imports and exports are now example, now faces a significant challenge in the winter part of the region’s expensive shipping network. Freight tourist season, as cargo ships are forced to wait until after rates between Miami and the Caribbean are similar to cruise vessels sail in the afternoon to commence their load those paid for the much longer distance between Miami and discharge operations. With cruise ships leaving port and Buenos Aires, Argentina. Port handling charges in between 5:00 and 6:00 p.m., cargo vessels must endure the Caribbean vary between US$200 and US$400 per long delays and high overtime labour costs. A response container, far more, for example, than the US$150 per to this problem was undertaken in Georgetown, Cayman container charged in Argentina. Islands, where the government reorganized port labour to facilitate work over any 40 hours per week, either night or day. Overtime wages start when the first 40 hours The Caribbean shipping industry faces significant are exceeded. This has resulted in a significant decrease obstacles. It must overcome the unfavourable economies in costs to shipping lines. The island also saved millions of scale characteristic of the industry and the inherent of US dollars by not having to build a separate cruise disadvantages of operating from and between small and ship port that would only be busy for five months of the isolated states. The present volume of cargo does not, in year during the cruise season. This could be a possible the short term, appear to justify the large fixed capital cost solution for the port of Bridgetown, Barbados, where the needed to secure more efficient port operations. One cargo government is considering building a new port that will be container handling crane, for example, costs US$8 million. underutilized, based on seasonal cruise ship use. Instead, The costs of administration and support services are also Barbados could follow the example of the Cayman Islands, greatly influenced by economies of scale. In addition, reorganizing and maximizing the use of the existing smaller island ports are generally served by smaller (or facility, which would give cruise ships preference to use
18 | The Caribbean Maritime Transportation Sector: Achieving Sustainability through Efficiency The Centre for International Governance Innovation
the port facility during the day, while cargo ships could consumers as it increases the number of services that call work at night, but pay labour regular wage rates. at the port while lowering unit costs.
A close analysis shows that Caribbean ports may not The Caribbean lies at the crossroads of several major necessarily lack capacity overall, nor is the number of shipping routes that, if managed properly, could greatly carriers insufficient for present needs. Instead, harmonized increase cargo flows through Caribbean ports. Developing regulatory and legal reform is needed to create incentives the most efficient network would require regional to improve management and administrative practices, agreements to share in the infrastructure investment stimulate investment for existing facility modernization costs so that all ports might benefit from increased traffic and ensure efficient pooling of resources in this area. flows. A lack of cooperation among carriers also leads Industry reforms should emphasize greater competition, to inefficient use of cargo space. Carriers with a backlog regional cooperation and modern efficiency techniques. of cargo often prefer to keep cargo idle and customers waiting, rather than approach a competitor sailing away Port performance in the Caribbean is hampered by a lack with a half-empty ship. In other regions, maritime carriers of competition. Given that island ports have full monopoly cooperate with slot sharing agreements and alliances power over cargo movements to and from the island to utilize shipping capacity in a more effective way. A hinterlands, Caribbean governments have been reluctant voluntary regional system in which ships and shippers to privatize their ports. In most cases, governments retain can access information on available capacity could greatly ownership of port infrastructure and are heavily involved improve the use of cargo space. in port operations. Although many Caribbean islands are too small to support multiple ports, it is nevertheless It is important to modernize Caribbean maritime labour possible to achieve competition within a port. One example policies and practices if the Caribbean is to lift its standard is Georgetown, Guyana, where there is now competition of global competitiveness. Some ports still close after among different private and public operators within 5:00 p.m. in the evenings and on the weekends. Improved the port. Although 60 percent of port traffic still passes maritime training and technical help is needed to ensure through one private terminal, competition has reduced local seafarers are trained to meet international certification handling charges by 25 to 30 percent. It is possible, even in standards and that Caribbean shipping comply with smaller ports, to separate services and spark competition. international maritime safety and environmental laws. Reforms are therefore needed to strengthen independent Improved data collection in a homogenous format is port authority institutions, and separate regulatory and also needed to expedite cargo processes and provide operational functions are needed. As discussed earlier, in industry analysts with the means to assess problems and Jamaica, the PAJ operates KCT, which is in competition to craft improvements throughout the region. Further with KWL (a publicly listed company on the Jamaica stock harmonization and rationalization of customs procedures exchange). However, the PAJ has regulatory functions for could save days, and even weeks, from the time it takes to all ports in Jamaica. This often creates conflicts between move cargo to its final destination. There is an urgent need KWL and the PAJ as noted earlier. for Caribbean customs to move away from being primarily a collector of revenue to helping cargo facilitation. Efforts to improve cooperation among Caribbean port authorities and shipping companies could provide Annual Caribbean seaport investment needs roughly further benefits. Coordination to facilitate growth in US$300 million — the challenge is where this investment transshipment, for example, where cargo is moved to will come from. The overall approach towards improving and from intermediate hub ports on the way to its final Caribbean shipping should emphasize legal reforms to destination, could benefit the entire region. Transshipment encourage market competition and regional cooperation, allows the use of larger and more specialized vessels, as well as technical assistance to improve labour and and takes advantage of economies of scale at the major infrastructure efficiency. Caribbean industrial policies hub ports. For small countries, even a low volume of have, in the past, focused on the direct benefits of a transshipment can make up a high proportion of total national maritime sector protected by preferential policies, port cargo traffic. Transshipment is extremely attractive but now general institutional attention must continue to ports, because it adds cargo to the local trade, making to shift towards even greater indirect benefits of foreign otherwise uneconomical operations profitable and trade enhanced by an efficient and inexpensive transport expensive infrastructure investment more viable. This, system. Regional organizations such as the private sector in turn, leads to direct benefits for local traders and — Caribbean Shipping Association (CSA), Association
Fritz H. Pinnock and Ibrahim A. Ajagunna | 19 THE CARIBBEAN PAPERS
of Caribbean States and the Caribbean Community implementation of “no discharge” or very strict discharge (CARICOM) should provide a much needed regional standards. Sixteen years since the designation, the region perspective in the dialogue on shipping problems and has not been able to implement the Special Area status, be encouraged to deliver the impetus and leadership for due to the absence of reception facilities to receive the inciting reforms (Anneke and Rodriguez, 1999). garbage. Some of the Eastern Caribbean sub-region states and Barbados have these facilities. The majority of other states have not established the facilities for a number Environmental Management of reasons, including cost and indecision relating to the Framework for the Caribbean mechanism for recovering the costs, which may make a port uncompetitive. Both SOLAS 74/78 and MARPOL Cruise Industry 73/78 contain provisions allowing port states to exercise limited jurisdiction over ships, including the power to Maritime transportation and cruise shipping is sui generis detain the ships where the certificates produced to the Port international, as their operation involves port calls in State Control officers are not consistent with the condition several jurisdictions within a relatively short space of time. of the ship. There appears to be no record of any detention The framework for the regulation of the operation of the of a cruise ship, for example, in a member state of the industry is, therefore, found in multilateral treaties known Memorandum of Understanding on Port State Control in as international conventions, which are developed and the Caribbean region, which could be due to the generally adopted at the International Maritime Organization (IMO) high standard to which cruise ships are maintained or the and International Labour Organization. These multilateral unwritten policy that cruise ships will not be inspected. treaties contain rights and obligations for flag states and port states alike; however, the provisions cannot be The International Convention on Civil Liability for Bunker enforced against ships unless these have been incorporated Oil Pollution Damage, 2001, provides a legal regime for into national legislation. The primary international establishing liability for pollution damage, including the convention governing the safe and secure operation of cost of reinstating the environment and preventative ships is the International Convention on the Safety of Life measures taken in response to the pollution incident. at Sea (SOLAS 74/78). All the states in the Caribbean have Cruise ships have discharged significant amounts of ratified the convention and incorporated its provisions bunker oil, and the convention provides for strict liability, in merchant shipping legislation. The International direct access to the ship’s insurers and compulsory Convention on the Prevention of Pollution from Ships insurance, all of which will assist claimants in recovering (MARPOL 73/78) regulates the operation of ships, in so far damages from a ship operator that has been found liable. as the prevention of pollution of the marine environment Only four countries are, however, state parties to the is concerned. MARPOL 73/78 contains regulations Convention as indicated in Table 12. governing the prevention of pollution by the following substances, which are classified according to Annexes addressing Oil (Annex 1), Noxious Liquid Substances Carried in Bulk, (Annex 11), Harmful Substances Carried in Packaged Form (Annex 111), Sewage (Annex 1V), Garbage (Annex V), and Air Pollution (Annex V1).
All the major flag states and the majority of countries have ratified or acceded to all the relevant annexes to the MARPOL Convention. Some states, however, such as Bahamas (one of the three largest flag states worldwide), have not ratified Annex IV on the regulation of sewage. Many countries, including Jamaica, have not passed legislation incorporating MARPOL 73/78, nor have they updated their legislation to address the current risks associated with ships. MARPOL 73/78 also reflects the minimum accepted standards, and it is known that the enforcement of its provisions is difficult. In 1993, the Wider Caribbean Region was declared a Special Area for Annex V (Garbage) and this status allows for the
20 | The Caribbean Maritime Transportation Sector: Achieving Sustainability through Efficiency The Centre for International Governance Innovation
Table 12: Status of Convention, December 2008
Country MARPOL Annex 1 MARPOL Annex 1V MARPOL Annex V Bunkers 2001 SOLAS 74/78 and 11 Antigua and Barbuda X X X X X Bahamas X None X X X Barbados X X X X X Belize X X X X Costa Rica None None None None None Cuba X None X None X Dominica X None X X Dominican Republic X X X X X St. Vincent and Grenadines X X X None X Suriname X X X None None Trinidad and Tobago X X X X UK (Cayman Islands and Anguilla) X X X X X Grenada None None None None X Guyana X X X X X Haiti None None None None X Jamaica X X X X X Mexico X X X X X St. Kitts and Nevis X X X None X St. Lucia X X X None X
Source: Pinnock (2012).
maritime transportation industry is extremely pervasive. It Policy Recommendations affects and is affected by many other sectors, ranging from construction and engineering to a wide range of services, To enable the Caribbean region to achieve sustainability thereby involving, or having implications for, the livelihood and efficiency for its maritime transportation industry in the of many people at all levels of society. The converse is also twenty-first century, the following nine recommendations true; the economic potential of maritime transportation can are put forward. be curtailed by a major policy failure in another unrelated area. Another reason is that maritime transportation imposes Integrated Approach (A Framework for a range of diverse burdens and impacts on the environment, Development) infrastructure, culture and social relationships. The role of integrated assessment in this regard is, thus, to identify The diverse and pervasive nature of the maritime linkages and interdependencies, which makes the costs, transportation industry highlights the importance of an benefits and consequences of a course of action more explicit. integrated assessment to help create better links between the disparate stakeholders (for example, see Clayton et The Caribbean remains isolated and disconnected from al., 2004). Integrated assessment is particularly important the global shipping and logistics supply chain. In order when making large strategic decisions that will effectively to achieve efficiency and productivity, it needs to benefit determine a future development pathway, which includes from the synergies of integration as outlined in Figure 1. public policy decisions that affect the national interest or Globalization rests on the following four primary pillars: corporate strategic choices that could lead to a comprehensive technology; global trade liberalization; specialization and repositioning and restructuring of firms (Clayton et al., economies of scale; and an integrated global supply 2004). According to Clayton, economically vital and diverse chain. The challenge for the Caribbean is how to realign sectors of any economy are particularly vulnerable to policy its fragmented air and maritime transportation networks, deficiencies. This is due to several reasons. One is that the shown in Figure 1, to the four pillars of globalization.
Fritz H. Pinnock and Ibrahim A. Ajagunna | 21 THE CARIBBEAN PAPERS
Figure 1: Obstacles for the Caribbean Harmonization of Legislation of the Maritime MaritimeTransport Sector Transport Industry
Global Trade The Caribbean Sea is a homogenous area shared by Technology Liberalization all Caribbean states. Collectively, the Caribbean islands
Airports need to harmonize legislation of the maritime transport industry to achieve efficiencies and sustainability. Since 2000, the IMO has developed model legislation Seaports Transportation for the English-speaking Caribbean to give effect to Road Network IMO instruments, which is being used by most of these countries. The model includes the following: Integrated Maritime Government Transportation • Ratification and accession to all of the major • Customs Warehousing • Immigration Dry and Cold international treaties governing safety, security and • Quarantine Storage • Regulations pollution prevention by all states as discussed above. • Ensure legislation that is promulgated is harmonized, Shipping Customer Lines with the assistance of the office of the IMO Regional Maritime Adviser, to prevent cruise ships, in Specialization / Integrated Global Economies of Scale Supply Chain particular, from playing one destination against the other due to the variation in island laws. As part of a World Bank project for waste management A Regional Approach to Port Security and systems in the Eastern Caribbean, legislation was Safety developed to enforce waste management both ashore and by ships, and agreement was reached among A regional approach to implementing and monitoring the countries to recover costs though a small levy on safety and security regulations would benefit all cruise ship passengers. This levy was, however, never Caribbean countries as these microstates share common implemented, as cruise ships objected to it, thereby problems of monitoring their water space. Most of the defeating the implementation process as no single islands are classified as micro states and it is difficult island could successfully apply such a levy without for each individual island to monitor its water space, sanction by the cruise lines. which is, on average, 15 times larger than its land mass. • Establish a regional policy on the management of A holistic approach would allow each country to pool its ship waste and establish adequate facilities to collect limited resources, yielding greater benefits and affording and manage such waste. In the early 1990s, the IMO, a stronger voice based on their strategic location — being through the World Bank, initiated a project to address the third border to the economies of North, South and the issue facing the wider Caribbean initiative on Ship Central America. Generated Waste. This project, however, failed due to lack of support from the Caribbean countries the Align Labour Market Regulation to Global project was designed to benefit. Standards • Matters relating to the regulation of shipping should be included in the agenda at CARICOM meetings and Regulation of the labour market speaks to the implement the Regional Transport policy in so far as standardization of certification, such as mandatory shipping lines are concerned. skills certification by IMO. This would allow maritime shipping and transportation the potential to develop • Implement, on a regional basis, the training of global collective bargaining for the protection of workers enforcement agencies, prosecutors and the judiciary and establish industry minimum standards. In addition, on matters relating to shipping lines — for example, regulation to global standards would make seafaring jobs customs, immigration and quarantine departments, as more attractive to Caribbean nationals. standards vary significantly across the region. • Complete a gap analysis on the equipment and other requirements necessary for testing and sampling the level of prolusion and waste
22 | The Caribbean Maritime Transportation Sector: Achieving Sustainability through Efficiency The Centre for International Governance Innovation
• Determine whether the costs for the acquisition attempt to improve port efficiency. Those ports that have and operation of equipment and facilities for waste not yet adopted this model may benefit from doing so. management can be shared regionally. Efforts to increase competition within and among ports have been shown to improve overall port performance, Consider the Public Benefit When Investing which in turn, attracts increased traffic. Public Funds in Maritime Infrastructure Projects
Caribbean states need to invest public funds in accordance Transshipment Is Not the Answer for All Ports with public benefit. One of the key issues relating to Goods should not be sought for their own sake. Although overall cost-benefit and value creation for a society is the transshipment can transform the business and size of opportunity cost of public funding. All Caribbean island a port, it is not necessarily the answer for every port governments have the right and obligation to ensure and has risks; therefore, governments should exercise that scarce public funding is dedicated to activities that caution before moving to the transshipment model. provide the greatest public benefit. Decisions on potential All Caribbean ports have the potential to develop a investments to support maritime transportation must be transshipment business. However, while there is room for compared with: improving efficiency and growing ports, there are risks in the transshipment model. Specifically, global and regional • realistic estimates of the benefits they will generate; competition is strong, and trade owes no allegiance to • other potential investments within the sector; and a particular country. Ports wishing to enter or expand • other investments outside the sector that could achieve transshipment opportunities should seek to do so with similar development outcomes. private entities that are specialists in the area, including those that are linked to major international shipping lines, Caribbean governments should evaluate the opportunity in order to share and manage risks. costs of investing limited capital resources and the use of prime real estate space to construct cruise ship port terminals that do not match the island’s image, culture Regional Organizations Should Provide and carrying capacity. Economic returns often do not Services to Member Governments justify the investment outlay, and capital could be better Sub-regional organizations and institutions (for example, utilized in supporting community-based activities with CSA, CARICOM and CMI) should cooperate with member less demand on the delicate infrastructure. governments by providing services such as access to databases and research, and by sponsoring events and Undertake Collective Economic, Social and maritime and logistics courses. Environmental Impact Studies The Caribbean islands collectively should conduct Conclusion their own economic, social and environmental impact studies to guide investments in ports development and The sustainability of the Caribbean maritime transportation infrastructure through integrated policy. This policy could sector draws heavily on the efficiency of ports infrastructure, draw on the experience of Bermuda and Alaska, whereby which forms the backbone of the industry. The port sector local residents played a major role in the development has been impacted radically by global changes over the past of cruise tourism policy. For example, in Bermuda, there two centuries. The Caribbean has been slow in adopting was buy-in from the public as their participation in the and conforming to major transformations in the industry, process played a major role in the success of the policy especially technology. During the nineteenth century and implementation. As with safety and security, regional the first half of the twentieth century, ports tended to be cooperation in the area of benchmarking and procurement instruments of state or colonial powers and port access would be beneficial to all ports in the region. and egress were regarded as a means to control markets. Competition between ports was minimal, and port-related Implementing the Landlord Model costs were relatively insignificant in comparison to the high costs of ocean transport and inland transport. As a result, The landlord model appears to have benefited those ports there was little incentive to improve port efficiency. To that have adopted it — for example, Kingston, Jamaica, achieve sustainability and efficiency, Caribbean maritime which has operated successfully employing this model. infrastructure needs to undergo a major physical, Trinidad and Tobago has also moved to this model in an legislative and labour practices overhaul.
Fritz H. Pinnock and Ibrahim A. Ajagunna | 23 THE CARIBBEAN PAPERS
Works Cited
Anneke, J. and E. Rodríguez (1999). “The Caribbean Community: Facing the Challenges of Regional and Global Intergration.” Inter-American Development Bank. Occasional Paper 2. Available at: www.iadb.org/intal/aplicaciones/uploads/ publicaciones/i_INTALITD_OP_02_1999_Jessen-Rodriguez. pdf.
Clayton, A., N. Duncan and C. Hayle (2004). “Tourism and Trade in Jamaica: An Integrated Assessment Study.” Unpublished paper. Sir Arthur Lewis Institute of Social and Economic Studies, University of the West Indies.
Containerisation International (2011). Available at: www.ci-online. co.uk.
Florida Ship Owners’ Group (2008). Unpublished group meeting proceedings.
Pinnock, F. and I. Ajagunna. (2009). “Caribbean Port Productivity and the Role of Human Capital.” Caribbean Maritime. No. 7. May–September, 2009
Pinnock, F. (2012). “Power Relations among Stakeholders and the Future of Cruise Tourism in the Caribbean.” Unpublished Ph.D. dissertation. University of the West Indies, Kingston, Jamaica.
UNCTAD (2007). Available at: http://unctadstat.unctad.org.
UNCTAD (2011). Available at: http://unctadstat.unctad.org.
World Bank (2007). Available at: www.worldbank.org/reference/.
24 | The Caribbean Maritime Transportation Sector: Achieving Sustainability through Efficiency The Centre for International Governance Innovation
Appendix
International Ports in the Caribbean Philipsburg, St. Maarten
Abaco, Bahamas Plymouth, Montserrat
Port of the Valley, Anguilla Point Lisas, Trinidad
Basseterre, St. Kitts Ponte-à-Pitre, Guadeloupe
Boca Chica, Dominican Republic Ponce, Puerto Rico
Bridgetown, Barbados Port of Spain, Trinidad
Castries, St. Lucia Port-au-Prince, Haiti
Caucedo, Dominican Republic Providenciales, Turks and Caicos
Charlotte Amaile, St. Thomas, US Virgin Islands Puerto Plata, Dominican Republic
Christiansted, Saint Croix, US Virgin Islands Rio Haina, Dominican Republic
Eleuthera, Bahamas Road Harbour, British Virgin Islands
Fort-de-France, Martinique Roseau, Dominica
Freeport, Bahamas San Adres, Columbia
Georgetown, Cayman Islands San Juan, Puerto Rico
Grand Turk, Turks and Caicos Santiago de Cuba, Cuba
Havana, Cuba Santo Domingo, Dominican Republic
Kingston, Jamaica St. Barthelemy, Guadeloupe
Kingstown, Grenada St. Eustatius, Dutch Antilles
Manzanillo, Panama St. George’s, Grenada
Marsh Harbour, Bahamas St. John’s, Antigua
Moa, Cuba Port Purcell, Tortola, British Virgin Islands
Montego Bay, Jamaica Vieux Fort, St. Lucia
Nassau, Bahamas Willemstad, Curacao
Oranjestad, Aruba
Source: Compiled by Fritz H. Pinnock and Ibrahim A. Ajagunna from Containerisation International (2011).
Fritz H. Pinnock and Ibrahim A. Ajagunna | 25 THE CARIBBEAN PAPERS
Shipping Lines Serving the Caribbean
ANL Container Line Pty Ltd
APL Ltd.
BBC Chartering & Logistic GmbH & Co KG
Caja Logistics
China Shipping Container Lines Co. Ltd.
Compagnie Maritime Marfret
Compania Chilena de Navegacion Interoceanica S.A.
Crowley Liner Services
Europe Caribbean Line
Frontier Liner Services
Grand Alliance
Hugo Stinnes Linien GmbH
Kawasaki Kisen Kaisha, Ltd.
Maersk Line
Mediterranean Shipping Co S.A.
Mitsui OSK Lines Ltd
Horizon Lines, Inc.
Nordana
Orient Overseas Container Line Ltd
Sea Star Line LLC
SeaFreight Line Ltd
Thompson Line
Tropical Shipping Co Ltd
Source: Compiled by Fritz H. Pinnock and Ibrahim A. Ajagunna from Containerisation International (2011).
26 | The Caribbean Maritime Transportation Sector: Achieving Sustainability through Efficiency The Centre for International Governance Innovation
The Caribbean Papers Series The Economic Partnership Agreement (EPA): Towards a New Era for Caribbean Trade John Rapley, Diana Thorburn, Damien King and Collette Repositioning the Caribbean within Globalisation Campbell Anthony Payne and Paul Sutton Caribbean Paper No. 10: September 2010 Caribbean Paper No. 1: June 2007 Fostering Growth and Development in Small States Brain Drain, Brain Circulation, Remittances and through Disruptive Change: A Case Study of the Development Prospects for the Caribbean Caribbean Laura Ritchie Dawson Avinash D. Persaud Caribbean Paper No. 2: June 2007 Caribbean Paper No. 11: October 2011 Beyond Tourism: The Future of the Services Industry in Social Partnerships and Development: Implications for the Caribbean the Caribbean Daniel P. Erikson and Joyce Lawrence Indianna D. Minto-Coy Caribbean Paper No. 3: April 2008 Caribbean Paper No. 12: December 2011 “Remote” in the Eastern Caribbean: The Antigua-US WTO Internet Gambling Case Andrew F. Cooper Caribbean Paper No. 4: April 2008
First, Do No Harm: The Role and Responsibility of Canada as a Destination Country in South–North Migration Laura Ritchie Dawson Caribbean Paper No. 5: April 2008
Public Sector Reform in the Commonwealth Caribbean: A Review of Recent Experiences Paul Sutton Caribbean Paper No. 6: October 2008
Diasporas and Development: An Assessment of the Irish Experience for the Caribbean Indianna Minto Caribbean Paper No. 7: April 2009
Caribbean Regional Governance and the Sovereignty/ Statehood Problem Matthew Louis Bishop and Anthony Payne Caribbean Paper No. 8: January 2010
The Communications Industry in the Caribbean: Issues, Challenges and Opportunities Indianna Minto and Hopeton S. Dunn Caribbean Paper No. 9: May 2010
Fritz H. Pinnock and Ibrahim A. Ajagunna | 27 THE CARIBBEAN PAPERS
About CIGI
The Centre for International Governance Innovation is an independent, non-partisan think tank on international governance. Led by experienced practitioners and distinguished academics, CIGI supports research, forms networks, advances policy debate and generates ideas for multilateral governance improvements. Conducting an active agenda of research, events and publications, CIGI’s interdisciplinary work includes collaboration with policy, business and academic communities around the world.
CIGI’s current research programs focus on four themes: the global economy; the environment and energy; global development; and global security.
CIGI was founded in 2001 by Jim Balsillie, then co-CEO of Research In Motion, and collaborates with and gratefully acknowledges support from a number of strategic partners, in particular the Government of Canada and the Government of Ontario.
Le CIGI a été fondé en 2001 par Jim Balsillie, qui était alors co-chef de la direction de Research In Motion. Il collabore avec de nombreux partenaires stratégiques et exprime sa reconnaissance du soutien reçu de ceux-ci, notamment de l’appui reçu du gouvernement du Canada et de celui du gouvernement de l’Ontario.
For more information, please visit www.cigionline.org.
CIGI Masthead
Managing Editor, Publications Carol Bonnett Senior Publications Adviser Max Brem Publications Editor Jennifer Goyder Publications Coordinator Matthew Bunch Media Designer Steve Cross
Communications
Communications Specialist Kevin Dias [email protected] (1 519 885 2444 x 238)
Executive
Executive Director Thomas A. Bernes Vice President of Programs David Dewitt Vice President of Government Affairs Mohamed Hamoodi Vice President of Public Affairs Fred Kuntz
28 | The Caribbean Maritime Transportation Sector: Achieving Sustainability through Efficiency
57 Erb Street West Waterloo, Ontario, Canada N2L 6C2 tel +1.519.885.2444 fax +1.519.885.5450 www.cigionline.org